March 27, 2011

More buy cellphones; bills ease

Although the number of cellphone subscribers and smartphone users in the U.S. in 2010 far exceeded the number in 2009, the cost of customers' yearly wireless bills fell, according to a semiannual survey conducted by CTIA-the Wireless Association.

Wireless providers reported 302.9 million subscriber connections for year-end 2010, compared with 285 million in 2009, the association said.

The number of active smartphones grew to 78.2 million in 2010 from 49.8 million in 2009. That represents 57 percent yearly growth, the survey says.

Yet the average cellphone bill fell about a dollar last year when compared with year-end 2009.

Wireless customers paid $47.21 on average for monthly cellphone services at the end of 2010, compared with $48.16 the year before.

"It reflects the increasing value that U.S. consumers are getting for their money," said Amy Storey, a CTIA spokeswoman. "Our members are fiercely competitive for every single customer, which means customers win with offerings such as a bundle of text/voice/data plans."

In 2010, wireless users increasingly relied on text messaging and multimedia messaging services, such as photos and videos, and tapered the amount of time they spent engaged in conversation on their phones.

The number of texts sent and received spiked 31 percent in 2010, and the number of photos and videos sent and received increased 64 percent, the study suggests.

Minutes of use fell from 2.275 trillion in 2009 to 2.241 trillion in 2010.

Data for the survey were collected from several major cellphone providers the association represents, such as AT&T, Verizon Wireless and Sprint Nextel Corp., and some that it does not.

Although the association sent out surveys to all cellphone providers in the U.S., they were not mandatory. The association received responses from companies serving 96 percent of all estimated wireless subscribers.

by Megan Neighbor The Arizona Republic Mar. 27, 2011 12:00 AM

More buy cellphones; bills ease

March 26, 2011

Trending News Channel : Tiger Woods’ "My Swing" App; Golf Tips Now Available on iPhone (VIDEO)

Tiger Woods hasn't won a tournament since his personal life imploded 16 months ago, but that doesn't mean he can't give great golf tips. And now there's an app for that-called "Tiger Woods: My Swing". iPhone and iPod Touch users get to videotape their swing and compare it with Tiger's mechanics.

The app costs a whopping $9.99, but Woods is donating proceeds to his education foundation. The release comes amid reports that Woods has a new girlfriend. Alyse Lahti Johnston is a 22-year old who among other things looks a bit like Tiger's ex, Elin Nordegren, and who is an aspiring golf pro. Maybe she can use the new app.

by Slate V Staff March 24, 2011

Trending News Channel : Tiger Woods’ "My Swing" App; Golf Tips Now Available on iPhone (VIDEO)

OMG! enters Oxford Dictionary

LONDON - OMG! LOL! The venerable Oxford English Dictionary approves of the three-letter, Internet-inspired expressions used for "Oh, my God!" and "Laughing out loud."

It is adding them to the authoritative reference book's latest online update.

You can text the news to your BFF, "best friends forever."

Those three expressions, as well as IMHO, or "in my humble opinion," are among 900 new words included this week.

Cracking the dictionary is no easy task.

"The OED is quite cautious," said Graeme Diamond, OED's principal editor for new words.

Terms made popular online are included among the dictionary's 300,000 entries only when they have crossed over into everyday use, Diamond said.

Although the new abbreviations are associated with modern electronic communications, some are surprisingly old. The first confirmed use of OMG was in a 1917 letter by a British admiral.

Editors publish updates to the online Oxford every three months.

The OED's Internet version was launched in 2000 and gets 2 million hits a month from subscribers. It may replace the mammoth 20-volume printed edition, last published in 1989.

The new update also includes:

• "Muffin top," "a protuberance of flesh above the waistband of a tight pair of trousers."

• WAG, "wives and girlfriends." It was first used in 2002 to describe the female partners of members of the England soccer team. Now, it denotes the glamorous and extravagant female partners of male celebrities.

"By our standards, WAG is a real rocket of a word," Diamond said. "To go from being coined in 2002 to being included in 2011 is quite unusual."

• "Heart" as a verb, a casual equivalent of "to love" that is represented with a symbol, as seen on millions of souvenirs proclaiming "I (heart) New York."

It may be the first English usage to come from T-shirts and bumper stickers. "At some point, people started to vocalize what the symbol was rather than what the symbol stood for," said Fiona McPherson, another editor. "People now talk about hearting things left, right and center."

The latest update also hearts the Road Runner cartoon character. The word "meep," a short, high-pitched sound, made the cut.

There are other new terms from the online world, including ego-surfing (the practice of searching for your own name on the Internet) and dot-bomb (a failed Internet company).

Diamond said the Internet has revolutionized the way lexicographers work, giving them a huge amount of new evidence of word use.

Which brings us to another new online-inspired word: TMI, "too much information."

by Jill Lawless Associated Press Mar. 26, 2011 12:00 AM

OMG! enters Oxford Dictionary

BlackBerry drops DUI-checkpoint app

US senators on Tuesday pressed Google, Apple, and Blackberry maker Research in Motion to pull the plug on applications that can help drunk drivers use smart phones to elude police checkpoints.

BlackBerry users no longer will be able to pinpoint police drunken-driving checkpoints.

Following a request Tuesday from four Democratic senators, Ontario, Canada-based Research In Motion, maker of the BlackBerry, has agreed to pull from its online store downloadable applications that allow its operating systems to identify the locations of local police DUI checkpoints.

Sens. Harry Reid of Nevada, Charles Schumer of New York, Frank Lautenberg of New Jersey and Tom Udall of New Mexico asked RIM, Apple and Google to disable or stop selling the apps for BlackBerry, iPhone and iPad, and Android devices.

USA Today reported Monday on the growing popularity of apps that identify law-enforcement tools such as DUI checkpoints, speed traps and red-light cameras through user-submitted information that connects with GPS data.

Research In Motion did not respond to a request for further comment. The senators said RIM thanked them "for bringing the issue to the company's attention and said that they would comply with the senators' request to remove the applications, likely within the day."

The senators praised RIM and urged Apple and Google to follow RIM's lead. Cupertino, Calif.-based Apple, maker of the iPhone and iPad, and Mountain View, Calif.-based Google, which makes the Android, did not respond to requests for comment.

"Drunk drivers will soon have one less tool to evade law enforcement and endanger our friends and families," the senators said in a joint statement Wednesday. "We appreciate RIM's immediate reply and urge the other smartphone makers to quickly follow suit."

The senators' letter, which did not name any apps, said that one of them contains a database of DUI checkpoints updated in real time. Another allows users to notify other drivers of such crackdowns in real time and has more than 10 million users.

The senators didn't raise any concerns about the apps' other features.

In announcing the agreement with RIM, the senators cited statistics showing that someone dies every 50 minutes in a drunken-driving crash.

Costs of the apps vary.

by Larry Copeland USA Today Mar. 24, 2011 12:00 AM

BlackBerry drops DUI-checkpoint app

U.S. responds to cyberattack

WASHINGTON - Federal agencies are confronting possible repercussions from a cyberattack disclosed late last week on one of the nation's largest information-security companies.

RSA Security, a division of EMC, has contracts throughout the federal government for its SecurID system, which uses a token to generate a random six-digit number every 60 seconds. That number, when used with a user's password, provides access to unclassified systems throughout government agencies.

In a filing March 17 to the Securities and Exchange Commission, EMC reported "an extremely sophisticated" cyberattack that targeted its RSA business unit and resulted in "certain information" about its products "being extracted."

Although there were no reports of lost customer data, the risk is that the stolen information could enable a successful attack later, company officials said.

"We do not believe that either customer or employee personally identifiable information was compromised as a result of this incident," RSA Executive Chairman Art Coviello said in a letter to customers accompanying the March 17 filing.

Amy Kudwa, a spokeswoman for the Department of Homeland Security, said the federal government was working with RSA to secure networks that are accessible via SecurID.

The tokens would generally be used when a government employee is trying to gain access to a computer system while on a personal computer or laptop.

"It's not classified data, but more proprietary and personal data that's at issue," said one defense industry official familiar with the breach, which occurred this month.

"It will be a fairly significant event before this is all said and done."

Security experts said the breach demonstrates another evolution in cyber-attackers' tactics.

Instead of targeting banks or government agencies, they are targeting firms that provide security to those entities.

by Ellen Nakashima Washington Post Mar. 24, 2011 12:00 AM

U.S. responds to cyberattack

Scottsdale firm accused of texting scam

A Scottsdale-based company faces accusations that it generated millions of dollars in revenue by using a deceptive Internet marketing scheme to get wireless customers to buy premium text-messaging services.

Lawsuits filed by Verizon Wireless and the Texas attorney general allege that cellphone-applications developer Jawa used shell corporations, false business addresses, websites that did not comply with industry standards and diversionary software to deceive customers to buy its services.

A Verizon Wireless spokesman said the company does not know how many of its 95 million customers were charged as much as $9.99 a month for the text messages, but it has set up a system to offer refunds.

Jawa Chief Executive Jason Hope denied the allegations. He said his company is being unfairly targeted by Verizon Wireless. The carrier simply wants the revenue brought in by Jawa and similar companies for itself, he said.

Hope is known not only for the fast-growing company - it has grown to 240 employees since being founded in 2005 - but also for his opulent lifestyle. He hosts lavish parties and celebrity guests at his 100,000-square-foot estate still under construction in north Scottsdale. He also has a philanthropic bent, focusing on education, disease prevention and youth services, according to the company website.

The lawsuits demand that Jawa halt its alleged fraudulent practices. The lawsuits also seek punitive damages and customer restitution.

In a complaint filed March 7 in U.S. District Court in Phoenix, attorneys for Verizon Wireless detailed allegations of how customers doing simple Internet searches could be duped into providing their cellphone numbers, which triggered monthly charges. Verizon Wireless said Jawa used sophisticated techniques so that its auditors couldn't discover the deceptive marketing.

The lawsuit targeted Hope, five others and 20 limited-liability companies Verizon Wireless says are controlled by Jawa.

The case centers on premium text-messaging services, which include ringtones, news alerts, recipes and other content that is delivered for a fee to a customer's wireless phone. Once customers sign up, the costs are added monthly to their bill.

Wireless carriers such as Verizon Wireless offer contracts to software firms to offer these premium services, in return for a portion of the profits. By fraudulently using Verizon Wireless' networks, Jawa is placing unauthorized, misleading and deceptive charges on consumers' cellphone bills, a practice known as "cramming," according to the lawsuits.

"We know how many of our customers downloaded the various content that we've been able to identify that stem from Jawa and affiliated companies and people," said Jeffrey Nelson, Verizon Wireless spokesman. "What we don't know, and won't know for certain, is how many of those people intended to get it, wanted to get it and wanted to keep getting it."

In a counterclaim, Jawa said that its business practices follow industry standards and are not fraudulent and that Verizon is working to ruin its business by cutting off all sources of its funding.

"Verizon has willingly accepted and retained the profits over the last four years from what it now describes as a 'criminal enterprise' even though, during this time, it audited these practices," the claim, filed Monday, stated.

Verizon charges Jawa 30 percent of collected customer fees, resulting in Verizon's receipt of more than $30 million since 2008, according to Jawa's counterclaim. The company said its revenue generated by customers of Verizon was about $75 million during the past 12 months.

Hope said Jawa has similar agreements with all of the large mobile-phone carriers.

A hearing on Verizon Wireless' request for a temporary injunction against Jawa is set for April 13.

Action in Texas

The Texas attorney general filed a similar civil complaint March 10. Texas said its investigators determined Jawa used illicit websites to bait mobile-phone customers into submitting their wireless numbers online. It said the sites unlawfully failed to provide clear disclosures revealing that Jawa charged for the service and that the charges would be billed to a cellphone account.

Jawa operates hundreds of sites through which it advertises paid monthly subscriptions and other items, according to the Texas attorney general's complaint.

When users do Internet searches for common topics, such as song lyrics, maps, recipes and video games, the customer is directed to one of Jawa's sites, the office said.

The sites feature a bold, eye-catching box directing customers to enter their cellphone numbers.

The Jawa sites disclose a price in small, virtually unreadable one-line captions, according to investigators.

Hope accused Verizon in a court filing of falsely manipulating a webpage that had very clear pricing disclosures.

"If you just kind of glance at it, you don't see a price in there . . . ," he said. "You might see it, but it looks nothing like it would on your computer screen where there's clear pricing."

On March 16, a district court judge in Texas granted a temporary restraining order against Jawa, requiring that any documents or content related to the case be preserved.

A hearing to determine whether Jawa can continue operating while the case is heard is scheduled for April 6.

Aggressive actions

Beyond the lawsuit, Verizon Wireless has taken other business actions. It instructed four companies, known as aggregators, to freeze $19 million in charges for messaging services already provided by Jawa and for which customers already have been billed.

Aggregators, known as mobile-transaction hubs, enable wireless messages to be delivered to a customer and compile and transmit charges to the customer's carrier.

Hope and his attorney are firing back at Verizon.

"They want to target the third-party content industry to take it out so they can basically monopolize that industry for themselves," Hope said.

"That will add several hundred million dollars a year to their bottom line. We're the largest in the industry, so it's a very obvious target to start with."

Hope's attorney, Curt Langley, said the goal is to make an example of Jawa.

"They want to squish them and put them out of business and . . . intimidate their competitors," he said.

The allegations

According to state investigators in Texas:

- Jawa operates hundreds of topic websites through which it advertises paid monthly subscription services and other items. When the consumer does an Internet search for topics such as song lyrics, maps, recipes and video games, they can be directed to one of Jawa's websites. The websites feature an eye-catching text box directing customers to enter their cellphone numbers, but unlawfully fail to provide clear disclosures that customers will be charged for the subscription service and billed through their mobile-phone accounts. The websites disclose a price only in a very small, virtually unreadable one-line caption in a dark gray font on a black background.

- Jawa also sends customers text messages containing a password to enter on its website. The company references a cost at the end of the message where customers are unlikely to see it. In some instances, the cost is not displayed in the first text message, only in a second text message.

- The company further deceives customers by ensuring their inquiries about unwanted charges were directed to a "dummy" website.

Source: Texas Attorney General.

Help available

Verizon Wireless has set up a website for customers who may have signed up and been charged for third-party, premium text-messaging services based on advertising that does not meet Verizon Wireless' standards for price disclosure.

The charges could stem from content associated with a company known either as Jawa, Cylon and/or Eye Level Holdings. The company name may not have appeared on the Verizon-issued bill.

Claim information can be found at Questions can be directed to 877-866-0631.

by John Yantis The Arizona Republic Mar. 24, 2011 12:00 AM

Scottsdale firm accused of texting scam

Lukewarm Reaction To Playbook Could Force Drastic Measures For Rim | paidContent


Is Research in Motion (NSDQ: RIMM) turning into Palm (NSDQ: PALM), the next big prize in the mobile industry’s consolidation?

Two of the most important companies in the prehistoric era of the mobile computer (late 90s to mid 2000s) were Palm, inventor of the Palm Pilot and nurturer of the Treo, and RIM, which introduced a generation of business professionals to the value (and burden) of constant access to the office through the BlackBerry. But then came the iPhone, and Android. After a pretty hard fall and then a solid-but-unsustainable comeback with the Pre and WebOS, Palm was rescued by Hewlett-Packard (NYSE: HPQ) at the expense of a storied brand. RIM’s efforts to do something similar—bet the farm on a new operating system as well as a new form factor—are being treated with the worst of all reactions: indifference.

Two and a half weeks before RIM is scheduled to unveil the Playbook, its first tablet computer, it disappointed investorswith its latest earnings report. Even more tellingly, it admitted that in order to achieve what co-CEO Jim Balsillie called demand for a “tonnage of apps” that RIM will support applications from a competing platform, Android. While the prospect of weaker profits and revenue over the next few months caused investors to flee RIM’s stock in droves on Friday, the bigger problem is long term: despite the face it still a huge player in the lucrative U.S. market, carriers, developers and investors are wary about betting on RIM.

Rotten berries:A week’s worth of conversations with various members of the mobile industry at the CTIA Wireless conference produced little evidence of enthusiasm for either the Playbook or RIM development in general. Apple’s iOS and Google’s Android are both well-designed modern operating systems, but what has really helped them succeed is the overwhelming support of application developers, who know that they must be on both platforms to be seen as relevant.

Hardly anyone feels the same way about the BlackBerry OS, now an aging platform that’s almost in the same situation Palm found itself in a few years ago with the nearly-defunct Palm OS. Even Microsoft’s Windows Phone 7, with just months on the market and not even close to as much market share as RIM, is seen as a more intriguing platform.

The Playbook runs a new operating system built by QNX, a company RIM acquired in 2010. But developer support for that new operating system has also been rocky. One prospective RIM developer named Jamie Murai railed against the company’s difficult Playbook development process a month ago, writing “You have succeeded in your quest of driving away a perfectly willing developer from your platform.”

And the way RIM is going to add support for Android apps could be counterproductive. Android apps will need a special “app player” in order to run correctly on Playbooks, and the Playbook will only support apps written for Android 2.3; not the Android 3.0 version designed specifically for tablets. That means the apps may not run very well and may look funny on the much-larger screen used by the tablet compared to the smartphone screens for which they were designed. And should that happen, Playbook users will direct their ire at both RIM and app developers.

Mistakes were made: What has happened to RIM, a company whose flagship product just a few years ago was good-naturedly compared to one of the most addictive drugs known to man? Any number of fingers can be pointed at factors like NTP, which distracted RIM’s upper management for years with a bitter patent suit that eventually cost the company $750 million and untold legal fees. Maybe it was RIM’s conservative base of IT managers and corporations, which didn’t push the company to develop the Web browsing and application-development features that consumers gravitated toward once Apple (NSDQ: AAPL), and then Google (NSDQ: GOOG), showed them what could be possible. The company’s continued focus on hardware over software as its differentiating factor, when the industry was tacking the other way, certainly didn’t help.

It’s impossible to completely write off a company that still has sizable market share and profits, as well as a recognizable brand. But it’s also impossible to argue that RIM is on the cusp of turning its fortunes around: the Playbook is simply not compelling enough compared to either the iPad 2 or even the Xoom to be recognized in the mass market, and developers aren’t willing to help make up the difference. Meanwhile, RIM’s smartphones look increasingly pedestrian against iPhone and Android models, not to mention Windows Phone 7.

Curious statements from the company’s leaders certainly don’t help. Mike Lazaridis, RIM’s other co-CEO, wasn’t quite as clueless as some made him out to be in an appearance at the D: Dive Into Mobile conference in December, but he did speak in the type of jargon and vague syntax that only a management consultant could love, rather than addressing concerns about RIM’s strategies head-on. On Thursday’s conference call, Balsillie said anticipated demand for the Playbook was strong, citing several companies wanting to order “tens of thousands of units.” He must know that even the most conservative estimates for iPad 2 sales so far, after just two weeks of sales, are in the 5-million-unit range, and most are quite higher.

Lead, Follow, Merge: What does RIM need to do to get back on track? The only nice thing about a slow decline is that it gives RIM’s management some time to figure how to get its groove back. But RIM is in need of a breakthrough: it’s the same kind of problem faced by those trying to chase Google in Web search. They can’t just try to match Google blow for blow, they have to come up with something truly different and compelling to shift user behavior.

RIM hasn’t come up with a product like that in years. And it seems pretty clear that Android support or not, few outside the company think the Playbook will change anything. Could it be time for drastic action?

HP bought Palm as part of an attempt by an old-school PC company to get in on a new generation of computing. We’ve known for a long time that consolidation of the five surviving mobile operating systems is inevitable, and perhaps the old-school PC company, Microsoft (NSDQ: MSFT), is finally ready to make an honest man or woman out of all the rumormongers predicting a Microsoft-RIM merger for years. With a market cap of only $29.5 billion following Friday’s sell-off, and an enterprise-oriented customer base already friendly with Microsoft, there might be no time like the present.

by Tom Krazit March 26, 2011

Lukewarm Reaction To Playbook Could Force Drastic Measures For Rim | paidContent

YouTube - Is Public the New Private (HUNGRY BEAST)

YouTube - Is Public the New Private (HUNGRY BEAST)

AT&T merger with T-Mobile may cut competition

Investors cheered AT&T's proposal to buy rival T-Mobile USA for $39 billion, but wireless-phone users might not be so enthusiastic.

If the deal receives the blessing of regulators - probably no sooner than next year - the resulting company would be more able to meet the rising demands of mobile-phone growth, with coverage extended to more users in small towns and rural communities in Arizona and elsewhere, the companies said.

But consumers might not see improved call quality and could face higher prices, observers warned.

"My sense is that, in the end, this will not be good for consumers because it will reduce choice," said Dan Gillmor, director of the Knight Center for Digital Media Entrepreneurship at Arizona State University.

Casey Thormahlen, a senior analyst at researcher IBISWorld in Los Angeles, said, "It's hard to identify a distinct benefit for consumers unless they hold AT&T stock."

The proposed deal raises key questions regarding network coverage, pricing, service quality and the viability of competitors.

AT&T and T-Mobile, a unit of Germany's Deutsche Telekom, are two of the biggest four wireless providers in Arizona and most other markets, along with Verizon and Sprint.

A merger would leave the combined firm and Verizon with a "duopoly," said Gillmor, with Sprint and smaller players a step or more back.

Specifically, AT&T would have 40.1 percent of the U.S. wireless-market share, said Thormahlen, up from 28.6 percent now. Verizon has 33.2 percent; Sprint, 17.2 percent; T-Mobile, 11.5 percent; and smaller players the rest.

Gillmor said that would be like having two giant U.S. airlines, complemented with several small regional carriers.

Some observers already are speculating that Sprint might not survive.

"The proposed merger would leave Sprint a distant third in what would then be a Big Three wireless market, and some analysts predict that it, too, would need to seek a partner," Paul Reynolds of Consumer Reports wrote in a commentary.

Competition also could narrow, possibly putting upward pressure on the prices wireless users pay.

"T-Mobile is the only one that's now competing seriously on price," Gillmor said.

Consumer Reports research indicates that T-Mobile charges less than many competitors on various plan types, Reynolds said.

"It's possible, even likely, that after a merger, these lower rates will continue only until T-Mobile's contractual obligations are up, and then they'll rise to the levels of AT&T and other major carriers," he wrote.

However, Thormahlen doesn't see prices changing much because regulators almost certainly would insist on concessions before approving the deal.

For example, he predicts that AT&T would have to provide open access to smaller competitors, allowing them to use its network.

Still, AT&T probably would become more profitable after a merger, Thormahlen said, and he predicted layoffs involving duplicative sales, customer-service and management staffs at the two companies.

The merger also raises customer-service questions.

A recent report by J.D. Power and Associates showed AT&T and T-Mobile trailing Verizon in quality of use nationally and in a 16-state Western region that includes Arizona in quality among users.

In the West, Verizon had the fewest reported problems among the four big players. Sprint was next, T-Mobile third and AT&T last, with a problem rate nearly double that of Verizon's.

The full J.D. Power survey elicited responses from 26,000 wireless users nationally and focused on several problem areas, from dropped calls to delayed messages. Overall call quality had improved steadily since J.D. Power conducted its first study in 2003 but has halted recently.

This is largely a function of the changing ways wireless customers are communicating, such as more frequent texting and placing more calls from, or to, indoor locations, said Kirk Parsons, senior director of wireless services at J.D. Power.

"Clearly, the industry has improved since we started our coverage," he said. "But the way customers are using phones has changed, and they're using them more in places where coverage isn't the best all the time, such as inside buildings and at home."

Reynolds also raised service questions, citing Consumer Reports survey results that show "AT&T to be the clear worst wireless carrier in the country, with below-average scores in almost every attribute."

But Thormahlen said he expects service to improve, in terms of fewer dropped calls, higher and more consistent connection speed, and so on.

In their merger announcement, AT&T and T-Mobile predicted call quality will improve and cited a government report showing wireless pricing generally has declined over the past decade despite an industry-consolidation trend.

The companies also say the merger will expand coverage, especially in lightly populated areas, thanks to increased cell-tower density, broader network infrastructure and other factors.

"AT&T will immediately gain cell sites equivalent to what would have taken on average five years to build without the transaction," according to the joint announcement.

However, Thormahlen said he doesn't think rural coverage will expand much, because T-Mobile focuses on urban areas.

The proposal has been approved by the boards of both firms but awaits Federal Communications Commission approval.

Even if the deal is approved, the process could extend into 2012.

Gillmor of the Knight Center said he hasn't seen many indications that the Obama administration is focusing on enforcing antitrust laws.

"And no amount of (regulatory) tinkering would change the basic anti-competitive nature of this," he said.

Parsons said it's too early to tell whether the merger will be good for T-Mobile or AT&T customers.

But the delay, he said, offers an opportunity for users to "get educated, do your homework and look at other providers in your market."

by Russ Wiles The Arizona Republic Mar. 22, 2011 07:04 PM

AT&T merger with T-Mobile may cut competition

China’s Baidu Rises to Record in U.S. on Report of New Products - Bloomberg

Robin Li, chairman, chief executive and co-founder of Baidu Inc., speaks at the Baidu Technology Innovation Conference in Beijing, China in 2010. Photographer: Doug Kanter/Bloomberg

Baidu Inc., owner of China’s most popular online search engine, rose to a record in U.S. trading after reports about new services the company is developing.

The company said it is testing Web browsing software for personal computers, following a report earlier this week that it is planning to develop a mobile operating system. Sina Corp., which owns the Twitter-like Weibo in China, also jumped to a record on speculation it will gain users after Google Inc. said China’s government is blocking its e-mail service.

“There’s an opportunity to expand beyond the search business for Baidu by going to mobile,” said Aaron Kessler, an analyst at ThinkEquity LLC in San Francisco. The “growth potential is big right now in this core search market” and the new products are “still leveraging their search capabilities.”

The browser may put Baidu in direct competition with Microsoft Corp.’s Internet Explorer and Google’s Chrome. Chief Executive Officer Robin Li is expanding Baidu, also China’s biggest Internet company by market value, in social-networking and video after it took search-engine market share last year when Google moved its search service out of mainland China.

Baidu’s American depositary receipts rose 1.1 percent to $134.92 as of 4:30 p.m. in New York yesterday, the highest closing price on record. The shares have risen for five straight days, bringing the weekly gain to 12 percent, the most in six months.

The Nasdaq Composite Index advanced 3.8 percent this week, the biggest five-day gain since July 2010.

Internet Gainers

Sina, China’s third-most visited website, surged 17 percent this week, leading gains among the nation’s Internet companies after Google said it discovered Gmail was blocked by the Chinese government earlier in the week. Inc. rose 7.2 percent in the past five days Inc. gained 6.2 percent.

“There’s still a lot of interest in Sina’s Weibo product. That has primarily been the driver for the company’s performance,” ThinkEquity’s Kessler said.

Baidu’s new desktop browser is being tested internally among employees and “dovetails” with the company’s “box- computing” technology, spokesman Kaiser Kuo said, without disclosing when it will be offered to the public. Earlier this week, he declined to confirm or deny a March 23 Financial Times report saying the company is planning to develop a “light operating system” for mobile devices.

Baidu accounted for 75.5 percent of China’s search-engine market by revenue in the fourth quarter, rising from 73 percent in the previous three months, according to research company Analysys International. Google’s share dropped to 19.6 percent from 21.6 percent, the research firm said.

by Belinda Cao Bloomberg March 25, 2011

China’s Baidu Rises to Record in U.S. on Report of New Products - Bloomberg

March 20, 2011

Use Internet sources to find lowest prices on gas

Looking for the lowest price at the pump? Several websites provide gas price data in specific areas.

Here are a few: Check gas prices in a specific area by selecting a state or entering a ZIP code. prices/index.html. Search for the lowest prices in an area by city and state, or ZIP code. Select a U.S. state or Canadian province to begin search for lowest local gas prices by ZIP code.www.gas Use an interactive map to track gas stations and prices in an area, or enter ZIP code or street names for price results.

Motor Trend: Locate for low petrol prices by state, county and city. www.motor

McClatchy-Tribune News Service
Mar. 20, 2011 12:00 AM

Use Internet sources to find lowest prices on gas

March 19, 2011

Adult content websites get .xxx domain

LOS ANGELES - Call it the red-light district of the Internet.

The aptly named .xxx domain for adult-content websites was approved Friday by the Internet Corp. for Assigned Names and Numbers, the group that manages the creation and distribution of Web addresses, despite fierce opposition from established porn stars and others in the industry who argued the decision would lead to censorship.

Florida-based company ICM Registry proposed the domain name .xxx in 2004 with plans to sell Web addresses, and a horde of adult-content websites and publications are now expected to register their brands lest they get snapped up by others. The triple-x domain suffix will not, however, be required by law for websites featuring ribald material.

"For the first time, there will be a clearly defined Web address for adult entertainment, out of the reach of minors and as free as possible from fraud or malicious computer viruses," ICM Chief Executive Stuart Lawley said in a statement.

Lawley said that his company has already been flooded by thousands of requests to reserve more than 200,000 domain names.

Critics of the move, which include Los Angeles-based adult video producer Vivid Entertainment and the Free Speech Coalition, a trade association for the adult industry, have argued that the domain-suffix would create a virtual, stigmatized section of the Internet that would ultimately curb free speech and be easier to censor.

Lawley has previously talked about his plans to build a "PayPal for porn" system that could process more than a $1 billion in transactions a year.

by Shan Li Los Angeles Times Mar. 18, 2011 03:00 PM

Adult content websites get .xxx domain

Politicians' Facebook posts raise legal worry

Politicians' Facebook discussions are blurring the lines between official business and personal opinions, which has experts concerned that elected officials may run afoul of Arizona's Public Records Law and the Open Meeting Law.

In city councils across the Valley, many members designate constituents and fellow elected officials as "friends" on the popular social-media site, then engage in fragmented debates on local issues between postings about festivals and family outings. In the southeast Valley, a Chandler councilman's personal Facebook page even led to informal budget-brainstorming discussions with elected officials from Tempe, Mesa and Gilbert.

Although no official decisions are being made on Facebook, the informal discussions could lead to breaches of local government regulations.

Under state law, electronic communications made or received "in pursuance of law or in connection with the transaction of public business" must be preserved as a public record. But most local governments have no means to screen and preserve Facebook discussions on officials' personal pages, which often are open to their online "friends" but not to the rest of the public.

It's also a violation of Arizona's Open Meeting Law when a majority of a city council holds an electronic discussion that hasn't been posted as a public meeting. In municipalities like Chandler and Gilbert, the majority of council members are Facebook friends who could easily hold impromptu electronic discussions, although there is no evidence they have done so.

Matt Lore, spokesman for the League of Arizona Cities and Towns, said the organization is scrambling to develop guidelines and educate municipal officials prone to engage constituents on a personal level. "Where's the line drawn between just being 'Bob' and being 'Bob the mayor'?"

Media-law attorney Dan Barr said that when an elected official's Facebook page contains an official photo or reference to the person's public post and invites interaction with constituents, "it comes closer to coverage of public-records law than a Facebook page mostly dealing with his or her personal life."

And if a city council member is communicating with a quorum of other members outside of a posted public meeting, the official could breaking the Open Meeting Law.

"The same principles apply no matter what the technology," Barr said.

Jerry Kirkpatrick, records manager for the state archives, said the agency has been inundated with social-media questions from local government officials. He also is grappling with the daunting prospect of having to retain unprecedented volumes of social-media dialog as "permanent public records." Because there is no policy for archivists to cull what state law considers "public record" from a social-media dialog, Kirkpatrick advises officials not to put unique information in social-media communications.

As many elected officials accumulate hundreds or thousands of Facebook "friends," it's unclear how much of the chatter must be retained as public records. Nor is it clear who, if anyone, is going to read through postings to separate "what I ate for lunch" from "let's talk about the new zoning rules."

"If they invite the public to talk about issues that may come up at a meeting or about new policies," that could be considered a permanent public record, Kirkpatrick said. "This is a conundrum public agencies are under in the changing communications world we live in. Our laws are archaic."

Legal advice to city officials about social-media use has been spotty, but municipal lawyers across the state are talking about the issue, Chandler City Attorney Mary Wade said.

"The world is spinning so fast that departments everywhere are freaking out about the sheer volume of records retention," she said. "We're talking to the state and trying to catch up."

Several city officials said that when a policy discussion or constituent complaint surfaces on Facebook, they ask the individuals to send their comments to the city e-mail system, which is archived as a public record. But others use the page as a virtual "town hall" and welcome such discussions.

Phoenix spokeswoman Margaret Shalley said the city is working on a social-media policy that will likely include council members' personal pages. "It's very, very tricky, and we're being very careful how we're approaching this," she said, adding that Phoenix will likely advise elected officials not to discuss any public-policy issues on Facebook.

Political consultant David Leibowitz operates Phoenix Mayor Phil Gordon's Facebook page and said it is used to repeat civic announcements and share news links, not to engage in policy discussions. With 5,000 "friends," Gordon does not have time to engage with all of them, Leibowitz said.

In contrast, Tempe Councilwoman Onnie Shekerjian gets personal on her page, where she also talks about city business. "I don't post press releases; I use Facebook so people know who I am. . . . I am more than a public official."

Her family, vegetable-gardening hobby, and a former insomnia problem were on Shekerjian's page beside chats about "positive" city issues, she said.

Mesa Mayor Scott Smith said he was "very well-schooled by the city attorney" on Facebook use and uses it only to disseminate city news and photos.

But Chandler Councilman Jeff Weninger considers his Facebook page an electronic town hall and personal "branding" medium. He posts constantly, links to video chats and hosts public surveys. Weninger doesn't duck political dialog and controversy. Among recent posts about his wife's birthday and the Chandler Ostrich Festival was one in which he called on state Sen. Scott Bundgaard to resign his leadership position amid a domestic-violence investigation.

"I don't shy away from issues; it's all about having a conversation," he said. "I talk about decisions at work, the council, what movie I'm going to see."

Weninger said that he would resist any ruling that muzzles policy talk on Facebook and that he has those same conversations over the counter at restaurants he owns.

Shekerjian said a political conversation on Weninger's Facebook page recently brought a few elected leaders from Tempe, Chandler, Mesa and Gilbert together for informal meetings about budget challenges. Barr, the lawyer, said that so long as there was not a quorum from any of the council members, the gatherings did not violate the state's Open Meeting Law.

Weninger said he is careful not to skirt the meeting law and doesn't simultaneously discuss city policies with the four other Chandler council members who are his Facebook friends.

John Allcott, a Chandler school-bus driver and retired postal carrier, is a frequent poster on Weninger's Facebook wall. He regularly weighs in on city issues, especially involving public money. Allcott, 49, said he didn't know the exchange could be considered public record but said it doesn't bother him "because I know anything I write on the Internet is public."

Glendale Councilman Phil Lieberman considers his Facebook page an extension of his open political persona.

"I'm listed in the phone book," he said. "I attempt to make myself as available as I possibly can in any form of media. I have nothing to hide."

by Edythe Jensen The Arizona Republic Mar. 17, 2011 12:00 AM

Politicians' Facebook posts raise legal worry

Valley cities turn to phone apps to enforce zoning codes

With Valley cities straining under the weight of budget cuts, more are turning to smartphone applications to combat weeds, graffiti, green swimming pools and blighted houses.

The apps offer a high-tech way to improve government efficiency, eliminate red tape and focus efforts to enforce city zoning codes.

At a minimum, cities such as Phoenix, Mesa and Goodyear are viewing the apps as a way to improve communication with residents as smartphones multiply.

Avondale is at the forefront of this digital assault, using an app called PAM 1.0, developed by The app allows code-compliance officers to investigate complaints in a few easy steps and generate violation notices more efficiently.

Avondale code-compliance specialist Martha Ortiz demonstrated the system by using a smartphone to take a picture of a vacant house with a yard full of weeds. The phone's GPS recorded the address automatically. Ortiz then scrolled down a menu and checked the specific code violations.

Ortiz also can add notes to create a running log of inspections. When she returns to her office, she uses the information to generate a report that is mailed to the property owner.

The program is based on the technology initially developed by a sister company solely to combat graffiti.

Graffiti Protective Coatings currently has graffiti-abatement contracts with Avondale, Mesa, Goodyear, Tolleson, El Mirage, Tucson, Pima County and the Arizona Department of Transportation. Under its system, a city official or resident sends a GPS-coded picture of the graffiti, and a truck is immediately dispatched to remove it or paint over it.

Avondale agreed to be the test case for expanding beyond graffiti to all sorts of code violations.

"We're always looking for ways to make the code-enforcement officer's job more efficient," said Gina Ramos-Montes, Avondale's neighborhood and family-services director.

The Avondale app is named after Pam Altounian, Avondale's code-compliance manager, who developed a list of specifications for the program to make it useful to code-compliance officers throughout the nation.

"It allows our citizens to send any concerns they may have. Communication is better with this program," Altounian said.

The app developers say they hear that often.

"Everywhere we go, people tell us, 'We dreamed about something like this,' " said Barry Steinhart, general manager of both and Graffiti Protective Coatings. customizes the app for each city's use free of charge. Cities pay $20 to $50 a month for each employee using it.

Phoenix, Goodyear and Mesa are experimenting with the app, using a more cautious approach by making it available to residents for reporting a host of neighborhood issues.

More than 2,400 Phoenix residents have downloaded the app as a supplementary way to report graffiti, stolen shopping carts, trash and weeds, said Erynn Crowley, deputy director of neighborhood services.

"We have some regulars who use it all the time, and they love it," Crowley said.

But Crowley said Phoenix has no plans to purchase the full program, which would allow city officials to investigate complaints and issue citations.

"We're trying to be cost-conscious. We have a system that works," she said.

Mesa recently released to residents the app for reporting graffiti and potholes and other transportation issues. Previously, only about a dozen city employees had access to it.

Mesa has a more complete code-compliance program under review and hopes to release it to residents for reporting purposes later this month.

"I'm a huge fan of the application," said Craig Blum, Mesa's field-operations superintendent. "We don't just use it for graffiti. We use it for (burned-out or broken) street lights. We use it for illegal dumps. What a tool and time saver it is for us."

Buckeye officials recently attended a demonstration of how the app works in Avondale.

Bart Weiss, manager of the utilities-support division for Hillsborough County, Fla., near Tampa, said that he has 35 employees from various departments experimenting with the app during a six-month trial period.

Weiss' goal is to encourage teamwork among employees whose jobs involve inspection and enforcement.

For instance, a code-compliance inspector could use the app to send information to the sheriff's office or the transportation department.

Weiss said the county saves $90 every time the app prevents another employee from being dispatched.

"It's easy to get specific, accurate information to the right people quickly," Weiss said.

In February alone, Hillsborough staff members generated 306 reports, he said. In the past, many employees might have ignored a problem they spotted because it wasn't part of their job or because it was time-consuming to call someone.

by Jim Walsh The Arizona Republic Mar. 13, 2011 08:16 PM

Valley cities turn to phone apps to enforce zoning codes

March 12, 2011

Nev. mulls Internet poker bill; casinos voice opposition

CARSON CITY, Nev. - Some Nevada lawmakers want the state to be the first to regulate the multibillion-dollar, quasi-legal Internet poker industry. But with some of the most powerful casinos lining up against the proposal, the bill could be headed the direction of other recent federal and state efforts - a legislative grave.

The bill would ask state gambling regulators to create rules for Internet poker operators and companies that make related equipment. It would also specifically prevent the Nevada Gaming Commission from denying a license to popular existing poker sites - like PokerStars and Full Tilt Poker - just because they have been operating offshore in a legal gray area after a federal law effectively banned online gambling in 2006.

Alan Feldman, spokesman for MGM Resorts International, said the federal law needs to be fixed first.

"I think everyone's objective should be to get the proper bill passed, and to do so federally," he said. "The business model ought to be following sound public policy, and (the Nevada bill) is actually a pretty good model of getting a business model way far ahead of anyone's policy."

MGM Resorts, a publicly traded company that counts billionaire Kirk Kerkorian among its major investors, is Nevada's largest employer. But Feldman said the proposal introduced Thursday by Assemblyman William Horne is flawed.

"Online poker has been growing like gangbusters," said Horne, D-Las Vegas. "It will provide a new source of revenue that we aren't able to enjoy right now."

The bill opens up the possibility of partnerships between established Nevada casinos and major offshore poker operators, said Jeff Ifrah, a Washington D.C.-based lawyer who represents a Canada-based trade association for online casinos. But casino companies that oppose it would rather have exclusive competition than give players what they want, he said.

"If the state is serious about raising revenue for this endeavor, then it needs to be able to obtain the participation of the leading operators," said Ifrah, who represents the Interactive Gaming Council in litigation. The council counts PokerStars and Full Tilt Poker among its members.

"Those leading operators happen to be offshore," he said.

MGM Resorts has made no deals but has been approached by many Internet poker companies about establishing a partnership to combine their know-how with MGM Resorts' brands, Feldman said.

The American Gaming Association, the casino industry's largest trade group, declined to comment on the bill.

But the world's largest gambling company, Caesars Entertainment Corp., immediately criticized it even though it has been pushing to legalize online poker in the United States.

"This is not a bill that we support," said Jan Jones, Caesars' senior vice president for communications and public relations. "Our focus is not intrastate, our focus is interstate. It's federal, it's putting together an American, an appropriate regulation and licensing regime and taking the jobs and revenues going to foreign companies and bringing it back to America."

by Michelle Rindels Associated Press Mar. 12, 2011 12:00 AM

Nev. mulls Internet poker bill; casinos voice opposition

Products added after shooting

Ever since the VCR first allowed television viewers to tape their favorite shows and fast-forward through the commercials, advertisers and their audiences have been engaged in a technology-driven game of cat and mouse.

While advertisers have developed numerous gadgets and apps to recapture viewers' attention, their target audiences have amassed an equally impressive arsenal of high-tech tools for ad avoidance.

On a national level, advertisers and audiences have proven a fairly even match, but local advertisers have been at a disadvantage because of smaller budgets and lack of control over on-screen content such as product placements, tickers and bugs, according to high-tech entrepreneur Roy Baharav.

But not anymore, he said.

Baharav is co-founder and CEO of SeamBI, based in Sherman Oaks, Calif. The company sells do-it-yourself, digital product-placement software that allows local TV stations to insert local advertisers' brand names, products and logos into existing shows with a digital brush.

One of SeamBI's first customers is Phoenix-area station KASW-TV, owned by Belo Corp., which broadcasts on Channel 49 and is carried by Cox Communications on cable Channel 6.

The station is affiliated with the CW network, a joint venture by CBS and Warner Bros. Entertainment.

SeamBI - short for Seamless Brand Integration - lets local stations sell their own "in-program advertisements" and insert those images at the local level into already-filmed content, he said.

The added images track with the show's camera movement and are difficult to distinguish from original props such as posters, billboards and items on tables and countertops.

The advantages, Baharav said, are that viewers likely won't notice they are viewing ads, and that the only way to avoid those ads is to not watch the show.

"This product is part of the solution to the problem that people are skipping the commercials," he said.

It's good for local advertisers because they can charge a relatively small amount for a digital-ad placement that's targeted only to the areas in which that business operates.

SeamBI and a handful of competitors in the digital product-placement arena have been working steadily to improve the quality of their technology in the past several years, according to TV-industry reports.

While the technology is finally ready for prime time, it still involves meddling with someone else's artistic creation - in some cases, at least.

Baharav insisted that his company treated each program into which products can be added, mostly reruns from the past decade, with the utmost respect.

For instance, viewers will never see an iPad resting on Jerry Seinfeld's kitchen counter, because audiences know iPads did not yet exist when the show "Seinfeld" show was in production.

"You have to make sure that the product you're going to put in there makes sense," he said. "You have to incorporate the advertising in a way that doesn't bother the viewer."

by J. Craig Anderson The Arizona Republic Mar. 12, 2011 12:00 AM

Products added after shooting

Japan's quake-resistant buildings withstand temblor

Huge rubber shock absorbers, walls that slide and Teflon foundation pads that isolate buildings from the ground all help explain why medium- and high-rise structures in Japan remain standing in the wake of the country's largest earthquake on record, construction experts said Friday.

The location of the quake, 80 miles offshore, might also explain why most of the structural damage reported appears to be from the tsunami that followed the quake rather than the shaking itself.

Since the devastating Kobe temblor in 1995, Japan has become a world leader in engineering new structures and retrofitting old ones to withstand violent shaking.

"The Japanese are at the forefront of seismic technology," said Eduardo Kausel, professor of civil and environmental engineering at the Massachusetts Institute of Technology. "All modern structures have been designed for earthquakes."

Strong Japanese building codes specify rules for short, medium and tall buildings, said Ron Hamburger, senior principal at Simpson, Gumpertz and Heger, an engineering firm in San Francisco.

New buildings shorter than three stories require reinforced walls and foundation slabs of a certain thickness.

Midrise buildings, those up to 100 feet, require more-intensive engineering, while designs for high-rise structures often employ innovative earthquake-resistant designs that undergo rigorous review by the country's top structural engineers.

The omnipresent threat of large quakes has turned shake-proof innovations into selling points for new high-rises, drawing higher rents, Hamburger added.

Midrise buildings in Japan often rest on huge rubber shock absorbers.

These large absorbers slide back and forth, quickly dissipating lateral motion by turning it into heat. Designs must account for how far a building might shift left and right to avoid banging into neighboring structures.

However, one design expert said traditionally built houses nearest the epicenter probably fared much worse.

"My strong feeling is that there are collapsed wooden buildings in the hills and rural areas over there that we don't know about yet," said John W. van de Lindt, a civil-engineering professor at the University of Alabama who has tested new methods in Japan to help prevent such collapses.

About 2,200 people died in small wooden buildings during the Kobe earthquake, he added. That toll prompted the Japanese government to launch an intensive retrofitting program called Dai-Dai-Toku (roughly translated: "very, very special") to prevent a similar catastrophe.

It remains unclear how the fruits of the program, which included insurance and government assistance to retrofit buildings, performed Friday, but van de Lindt and a team of National Science Foundation-funded researchers will find out soon enough. The agency will send several rapid-response teams to Japan to evaluate the damage and gather data from collapsed structures, which will be used to improve construction methods.

by Brian Vastag Washington Post Mar. 12, 2011 12:00 AM

Japan's quake-resistant buildings withstand temblor

With iPad 2, Apple one-ups itself

SAN FRANCISCO - With the original iPad, Apple brought an attractive, easy-to-use tablet computer to the masses at a reasonable price - a feat numerous companies are trying to top.

With today's release of the iPad 2, Apple is pulling further ahead, with improvements that make an already excellent tablet even more enticing. It goes to show that when it comes to tablets, Apple refuses to be bested.

The new iPad is skinnier, faster and slightly lighter. It comes with cameras for video chatting and snapping photos, while keeping the same prices, ranging from $499 to $829 depending on the configuration.

The iPad 2 looks much like the first iPad, though it has a sleeker, lighter body with a curved back. All this helps the tablet fit more naturally in my hands, and the modified shape makes it easier to hold for extended e-reading sessions, for example.

Among the most noticeable changes is the inclusion of cameras, one on the front and one on the back.

This is something I've been hankering for, as the iPad's crisp display, measuring 9.7 inches diagonally, seemed like the ideal canvas for video chat. The subsequent arrival of several tablets with front and rear cameras made it practically a necessity for iPad 2.

Fortunately, Apple thought so, too. Both cameras on the iPad 2 work with the company's FaceTime video chat application and the back camera shoots high-definition videos.

A friend I chatted with over FaceTime moved pretty smoothly on the iPad's screen, though the image could have been much sharper. With the front camera, my friend could see me. If I switched to the back camera, I could show him my surroundings.

You can take still photos, too, though I found this awkward given the tablet's size.

The new iPad has Apple's new dual-core A5 chip, which helped applications open more quickly than on the older iPad. The original never felt slow, but the faster I can start a new game of "Plants vs. Zombies," the better.

Add to that a new version of Apple's iOS software. The new processor and the new iOS combined to improve Web surfing, as I could load up pages noticeably faster over my home Wi-Fi network. As expected, videos loaded quickly and generally streamed flawlessly.

The new software allows you to share music and videos from your iTunes library on multiple Apple devices on the same Wi-Fi network. And it now lets you set the iPad's mute switch to function as a screen lock.

The updated iOS comes with iPad 2 and is available as a free download for the original iPad and the two most recent models of the iPhone and iPod Touch.

Today, Apple is also rolling out iPad versions of its iMovie video-editing software and GarageBand software for recording and editing music. I tried GarageBand ($5) and was wowed by how simple it was and how well it took advantage of the iPad's touch screen.

If you're musically inclined, you can pick up your guitar and adjust its sound through GarageBand's bevy of amplifiers and effects pedals. If you don't play an instrument (or feel lazy), you can swipe through a list of "smart" virtual instruments. A guitar with preset chords lets you strum by swiping the screen. You can arrange drums on a grid based on how noisy and complicated you want the beat to sound.

The coolest part is how sensitive the virtual instruments are. Start beating your fingers on a virtual drum kit, and you can hit the drums and cymbals harder or softer. You'll get different sounds if you hit the ride cymbal in different places, and you can even tap the rim of the snare instead of just hitting the drum itself.

Should you feel the urge to have the latest and greatest, go for it. Chances are, it will be the best tablet in town - at least until the arrival of the iPad 3.

by Rachel Metz Associated Press Mar. 11, 2011 12:00 AM

With iPad 2, Apple one-ups itself

Apple's advantage vs. its competitors

NEW YORK - The new iPad model hitting stores today comes with several improvements over the original version but the same price tag, hobbling efforts by rivals at breaking Apple Inc.'s hold on the emerging market for tablet computers.

Competitors such as Motorola Mobility Holdings Inc. can't seem to match the iPad's starting price of $499. Tablets that are comparable to the iPad in features cost hundreds of dollars more, while cheaper tablets are inferior to the iPad in quality.

Usually, the early products in consumer electronics, such as the first Blu-ray players or digital cameras, are expensive. Competition then gradually brings prices down. With the iPad, the reverse is happening, spelling trouble for competitors.

It's rare for prices to start low and stay low, yet it looks as if that's exactly what Apple intended. Apple appears to have chosen, right from the start, to make less of a profit from its iPads than it does from iPods and iPhones. That's an odd move for a company that isn't known for cheap products.

Apple's profit margin on the $499 entry-level iPad model is about 25 percent, according to an estimate by Toni Sacconaghi at Bernstein Research.

By contrast, the company's profit margin for all products, before corporate overhead, was 38.5 percent in the most recent quarter. Sacconaghi and other analysts estimate the margin for the iPhone 4 is 50 percent to 60 percent. (Apple charges about $600 for it, although it's cheaper in stores because wireless carriers subsidize it.)

Apple is telling investors to expect overall margins to keep declining, meaning competitors can't expect much of a reprieve.

There are cheaper tablet computers available, but they don't perform as well - with poor screens, poor touch sensitivity and poor software, and overall slowness. Archos sells a tablet that's roughly iPad-sized for $370. Reviewers at CNET and Laptop Magazine say its screen washes out unless you're right in front of it, and it has problems sensing touch.

A tablet that can match the iPad 2 in quality and features costs much more.

About 100 different models of tablet computers have already gone on sale or are on the way. Gartner Inc. project that 65 million tablets will be sold worldwide this year, and analysts expect the bulk of them will be iPads. Apple sold 15 million of the original iPad in its first nine months on sale.

Apple sells about a third of iPads in its stores and from its website. By cutting out the middleman, Apple is able to keep more of the profit margin.

Also, the iPad uses many of the same chips as the iPhone and iPod. That means Apple is able to buy them in huge quantities, bringing down costs. Wayne Lam at research firm IHS iSuppli estimates that Apple alone buys 20 to 25 percent of the world's production of flash memory chips, which go into phones, iPods, memory cards and the iPad.

Lam also speculates that Apple is using its clout and its cash to ensure supplies of another crucial component: touch-screen displays, which make up a large share of the tablet's cost.

Apple said in January that it had spent $3.9 billion on long-term contracts to secure supplies for the next two years of a "very strategic" component it wouldn't identify. If Apple is indeed tying up a lot of the production capacity, competitors could have difficulties getting screens at a reasonable price. Apple did not immediately return a message to comment on that or its overall pricing strategy. Motorola also had no immediate comment.

Apple also designs its own processing chips to run iPad and the iPhone, based on blueprints it licenses from ARM Holdings Inc. For its Xoom, Motorola buys its main processing chip from Nvidia Corp., meaning there's one more vendor to pay.

One other factor is the software powering the tablet. The Xoom and other rivals generally use Google Inc.'s Android system, which Lam says demands more memory, raising the cost of the product.

In short, using Android forces iPad competitors to produce more expensive machines, Lam said. They might be able to bring component costs down by working closely with Google to optimize the software, but meeting the needs of a range of devices and companies is difficult. Because Apple controls its own software, it's in a better position to tailor it to its own devices.

That adds up to difficult math for competitors.

by Peter Svensson Associated Press Mar. 11, 2011 12:00 AM

Apple's advantage vs. its competitors


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